Fundraising health check – cut your reliance on grants

One of the aims of IoF Cymru’s Fundraising Health Check and Executive Coaching Project is to help charities reduce their reliance on grant funding. To be eligible to participate in the Fundraising Health Check aspect of the project, charities need to have less than £50,000 in voluntary income (excluding grants).

We have purposefully excluded grant income in the voluntary income definition for the project. Being heavily grant reliant or reliant on one income stream is not a sustainable position for an organisation to be in.

There are several obvious reasons why organisations like the Institute of Fundraising and other charity support bodies encourage charities to develop a variety income streams:

• Increased sustainability

• Increased unrestricted income and ability to cover core costs

• Increased sense of security for staff and service users

However, in my travels talking to small and medium charities around Wales, I'm learning about the less obvious implications of grant funding, which are also motivating charities to reinvigorate their fundraising activity.

Often, before an organisation receives a large grant, projects or services are run based on the generosity of the local community. This can be through giving their time or resources or paying for the services. Something as simple as paying 50p for a cup of tea helps the organisation’s sustainability by covering the costs of that provision.

Bringing funding in to very community centred projects/services like this can be problematic in two ways:

Reliance and dependence

Once funding is in place to cover these costs and pay for staff, communities can sometimes become complacent. In some cases, community willingness to invest in a project can be replaced by complacency and dependence on the free service. There is a risk that people can become resentful of being asked to pay when they know a project or service is being funded. They might not understand the need for the organisation to make these charges in order to develop its sustainability in preparation for the end of funding.

Sense of community ownership

Once staff are brought in under a funded project, community members can lose their sense of ownership of a community based project if they no longer feel needed or feel replaced by paid staff members. This can result in a loss of volunteers and donations if it's assumed that the staff members can do everything and project funding covers all costs.

Grant funding is and will remain an important part of many charities' income portfolios. In 2015/16, grants given by charitable foundations grew by 12% to £2.9bn, and they can provide much-needed financial resources.

Like any other income source, it’s important for charities to consider the cost benefit analysis of applying for grants; from time and staff resources required to complete the requisite monitoring requirements to the more cultural impacts on your organisation and its community.

Many funders, especially of larger funds, are increasingly looking for community consultation to heavily feature in project planning. This consultation would be a good opportunity to talk through the longer term sustainability of your project/organisation, so that community members and service users understand why they are charged for particular activities, and how this will help to safeguard the project/organisations future.

If any of these issues seem familiar to you, or you would like support in exploring more income sources for your charity, consider joining our fundraising health check project. If approved onto the project, you’ll receive support from a fundraising coach, who will help you to develop a new fundraising strategy.

Your organisations is eligible to apply if it is a registered charity in Wales, has two or more part or full-time members of staff and earns less than £50,000 per year in voluntary income, excluding grants.

For more information and an application pack, contact Alison Pritchard, Project Coordinator, at alisonp@institute-of-fundraising.org.uk or call 02920 340062.